Models for Predicting Health Costs

Question 1

Types of predictive models not based on medical conditions (traditional techniques to predict cost) (3)

Answer 1

1. Age/sex - rates are established for a group based on the average age/sex factor of the members in the group.
2. Prior cost - the prior year’s claims are used to project future costs (is reasonably accurate for large groups but not small groups).
3. Credibility weighted approach (combine age/sex and prior cost) - for smaller groups

Question 2

Sources of data for developing risk factors (3)

Answer 2

1. Claims data - for medical condition-related risk factors such as diabetes or cancer.
2. Self-reported data - for lifestyle-related risk factors such as smoking, stress, lack of exercise, poor nutrition, etc.
3. External data - for lifestyle related risk factors such as industry, geography, education, and income level.

Question 3

Risk factors identified by a health risk assessment (12)

Answer 3

1. Personal disease history
2. Family disease history
3. Health screenings and immunizations
4. Alcohol consumption
5. Injury prevention behavior
6. Nutrition
7. Physical activity
8. Skin protection
9. Stress ad well-being
10. Tobacco use
11. Weight management
12. Women’s health (i.e. pregnancy status)

Question 4

Expected cost weiight on prior year cost (Z)

Answer 4

Z = sqrt(N/2,000), N = members

Expected cost = (ZxPrior Year cost) + [(1-Z)xBOB Cost]